Matt Levine’s Money Stuff: Nobody Trusts the Banks Now

Oh banks

What is going on? I think there are two ways to think about the basic business of banking:

1. Banks borrow short to lend long. They use deposits (which can be withdrawn at any time) to fund loans and buy bonds (which don’t get repaid for a long time).

• 2. Banks really borrow long to lend long. They use deposits to fund loans and buy bonds, and as a technical legal matter those deposits are short-term (and can be withdrawn at any time), but they aren’t really. Most people — and most businesses — keep their money at a bank ...